Bank Switching and Interest Rates: Examining Annual Transfers Between Savings Accounts

Journal of Financial Services Research, Forthcoming

35 Pages Posted: 8 Apr 2019

See all articles by Dirk Gerritsen

Dirk Gerritsen

Utrecht University - School of Economics

Jacob Antoon Bikker

De Nederlandsche Bank; Utrecht University - School of Economics

Date Written: December 31, 2018

Abstract

We study the savings transfers between banks by retail depositors. Our sample comprises annual savings account data from the Netherlands for the period from 2004 to 2014. We control for demographic factors and find that the differences in interest rates across savings accounts help explain the extent to which depositors reallocate their savings to either a newly opened or an existing account. The depositors in our sample transfer between 3 and 6% of their savings for each percentage point difference in the interest rates. This effect is robust across various selected samples and model specifications. In addition, we show that depositors transfer a higher proportion of their deposits during the 2008-2009 financial crisis than during non-crisis years. During that crisis, the difference in interest rates remained a highly important determinant of transfer behavior.

Keywords: Banks, Switching Behavior, Reallocation of Savings, Interest Rates, Savings Account, Financial Crisis, Financial Literacy

JEL Classification: D14, G21

Suggested Citation

Gerritsen, Dirk and Bikker, Jacob Antoon, Bank Switching and Interest Rates: Examining Annual Transfers Between Savings Accounts (December 31, 2018). Journal of Financial Services Research, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3352015 or http://dx.doi.org/10.2139/ssrn.3352015

Dirk Gerritsen (Contact Author)

Utrecht University - School of Economics ( email )

Kriekenpitplein 21-22
Adam Smith Building
Utrecht, +31 30 253 7373 3584 EC
Netherlands

Jacob Antoon Bikker

De Nederlandsche Bank ( email )

PO Box 98
1000 AB Amsterdam
Amsterdam, 1000 AB
Netherlands

Utrecht University - School of Economics ( email )

Kriekenpitplein 21-22
Adam Smith Building
Utrecht, 3584 EC
Netherlands

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